Important Terms for the Equity My Way Home Equity Line of Credit (April 2014)

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1 Important Terms for the Equity My Way Home Equity Line of Credit (April 2014) Federally Insured by NCUA.

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3 TABLE OF CONTENTS Important Terms of Our Home Equity Line of Credit (secured by your home)... 5 Equity My Way Line of Credit... 7 Other Provisions for the Equity My Way Line of Credit... 9 Equity My Way Line of Credit Example Glossary Where To Go for Help More Resources... 17

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5 Important Terms of Our Home Equity Line of Credit (secured by your home) This disclosure contains important information about Golden 1 Credit Union s Equity My Way SM Line of Credit. You should read it carefully and keep a copy for your records. Availability of Terms: All the terms described below are subject to change. If these terms change, other than the annual percentage rate (APR) due to fluctuations in the index, and you decide, as a result, not to enter into an Agreement with us, you are entitled to a refund of any fees you paid to us or anyone else in connection with your application. Security Interest. We will take a security interest in your home. You could lose your home if you do not meet the obligations in your Agreement with us. Possible Actions. We can terminate your line of credit, require you to pay us the entire outstanding balance in one payment and charge you certain fees if: You engage in fraud or material misrepresentation in connection with the line of credit. You do not meet the repayment terms. Your action or inaction adversely affects the collateral or our rights in the collateral. We can refuse to make additional extensions of credit or reduce your credit limit if: The value of the dwelling securing the line of credit declines significantly below the appraised value for purposes of the line of credit. We reasonably believe you will not be able to meet the repayment requirements due to a material change in your financial circumstances. You are in default of any material provision of this Agreement. Credit union membership is a material provision of the Agreement. We are precluded by government action from imposing the APR provided under this Agreement. 5

6 The value of our security interest is adversely affected by government action to the extent that the value of the security interest is less than 120 percent of the credit limit. A regulatory agency has notified us that continued advances would be an unsafe and unsound practice. The maximum APR allowed under the plan has been reached. The initial Line of Credit Agreement permits us to make certain changes to the terms of the Agreement at specified times or upon the occurrence of specified events. Notice of Right to Copy of Appraisal You have a right under the law to receive a copy of any appraisal, evaluation or assessment report prepared in connection with your application for a loan or line of credit to be secured by real property. We may order an appraisal to determine the property s value and charge you for this appraisal. We will promptly give you a copy of any appraisal, even if your loan does not close. You can pay for an additional appraisal for your own use at your own cost. Please note that any appraisal, evaluation or assessment obtained is to assist Golden 1 in determining whether or not to extend credit to you under the terms you have requested.the valuation should not be relied upon by you or anyone else to determine the value of the property. If you want a copy of the property valuation, we must hear from you no later than 90 days after we notify you about the action taken on your credit application or you withdraw your application. Please write us at the following address: Golden 1 Credit Union Attn: Real Estate P.O.Box Sacramento, CA Include in your letter: your name, the property address and your loan number, if known. Under certain circumstances, you may be required to reimburse us for the cost of the valuation as a condition of receiving the copy. 6

7 Equity My Way Line of Credit Term. You can obtain advances of credit for 14 years and 11 months (the draw period ). After the draw period ends, you must repay the remaining balance within fifteen (15) years (the repayment period). Minimum monthly payments will be required. Additional draws are not permitted during the repayment period. Fixed-Rate Loan Conversion. In addition to having the flexibility of a line of credit, you will be able to convert outstanding balances of your line of credit to a fixed payment, rate and term. This option will allow you to have up to five fixed-rate loan conversions at any one time. Fixed-rate loan conversions can only be requested during the draw period for the line of credit. Term options will be from one to twenty years, as long as it does not exceed the original term. Total Minimum Payment Requirements. The total amount due each month will consist of any fixedrate loan conversion payment(s) and line of credit monthly minimum payments, as well as any past due amounts and other charges due. Minimum Line of Credit Payment Requirements Draw Period. During the draw period, payments will be due monthly. Your minimum monthly payment will be determined by the following method (for the line of credit only): Interest Only Payment. The minimum payment will equal the Finance Charges that accrued on the outstanding balance during the prior billing cycle plus any late charges, and any past due or over-limit amount. For example, if you owe $10,000 at a rate of 4.00% and no other amounts are past due or over-limit, your monthly payment would equal $ Minimum Fixed-Rate Loan Conversion Payment Example Draw or Repayment Period. The minimum monthly payment for each fixed-rate loan conversion will be equal to the amount of principal plus the finance charge sufficient to repay the balance within the term selected at the time of the conversion. If you had an outstanding balance of $10,000 at a rate of 6.24% for a term 7

8 of 180 months (15 years) and no other amounts were past due, your fixed monthly payment would equal $ Additional Payment Information. You may make payments on your account at any time, and you may prepay all or any portion of the amounts that you may owe at any time without penalty as long as the account remains open for the first three years. You must pay the minimum payment each billing cycle regardless of any prepayments, as long as any balance exists. Payments apply initially to the revolving balance first with the following payment disbursement. 1. Unpaid interest (Purchases and Cash) 2. Billed late charges 3. Billed over limit charges 4. Debt protection fee 5. Cash item fees (cash advance fees, balance transfer fees in the order they were posted to your account) 6. Any remaining payments goes toward revolving MPD (Mininum Payment Due) a. Cash Principal balance first b. Purchase principal balance second 7. Any remaining MPD Fixed (if applicable) If two or more transactions were posted on the same day, your payment will be applied to the oldest first. Minimum Line of Credit Payment Example Repayment Period. During the repayment period, your minimum monthly payments will be 1.25% of the unpaid balance with a minimum payment of $100. Under this payment plan, the minimum payment may not fully repay the principal that is outstanding on your line of credit if subsequent credit advances are taken during the draw period. You will then be required to pay the entire remaining loan balance in a single balloon payment at the end of the repayment period. Balance-Reduction Plan Minimum Payment Example. If you made only the minimum payments and took no other credit advances, it 8

9 would take twenty-five (25) years and two (2) months to pay off a credit advance of $10,000 at an ANNUAL PERCENTAGE RATE of 4.00%. During that period, you would make 324 payments ranging from $33.30 to $ and a final monthly payment of $ Maximum Line of Credit Payment and Rate Example. The maximum payment and rate examples shown below are for both owner and non-owner lines of credit on the balancereduction plan. Owner Occupied. If you had an outstanding balance of $10,000, the minimum monthly payment at the maximum ANNUAL PERCENTAGE RATE of 18% would be about $ for 359 months with a final balloon payment of $19, Non-Owner Occupied. If you had an outstanding balance of $10,000, the minimum monthly payment at the maximum ANNUAL PERCENTAGE RATE of 19% would be about $ for 359 months with a final balloon payment of $22, Line of Credit Fees and Charges. There is currently no annual fee for your participation in the credit plan under this Agreement. There are no other fees to open, use, or maintain this account except for third-party fees, such as property insurance, as required under your Agreement. You must carry insurance on the property that secures this plan. Other Provisions for the Equity My Way Line of Credit. Hazard Insurance. Hazard insurance coverage against risks to the property secured by these plans will be required in an amount not to exceed the replacement value of the improvements on the property. Minimum Draw Requirements. There is no minimum draw requirement. Late Charges. Late charges are 6% of the current payment or $10, whichever is greater. Early Closure Fee. An early closure fee will be assessed if the line of credit is paid in full and closed within three (3) years from the date 9

10 of opening, in the amount of $ for nonowner occupied properties and $ or 2% of the original balance, whichever is less, for owner occupied properties. Grace Period. The Equity My Way SM Line of Credit does not have a grace period. These payment amounts are based on assumptions that payments are received on the first day of the payment billing cycle. Negative Amortization. Under some circumstances, your payments will not cover the finance charges that accrue, and negative amortization will occur, Negative amortization will increase the amount that you owe and reduce the equity in your home. Tax Deductibility. You should consult your tax advisor regarding the deductibility of interest and charges for the line of credit. Golden 1 does not provide tax advice. Other Provisions. If you ask, we will provide you with information on our other available home equity products. You authorize Golden 1 Credit Union to obtain a credit report in conjunction with this loan application and consent to the reuse of information contained in this credit report to offer other Golden 1 products and services. Variable Rate Features. The Equity My Way SM Line of Credit has a variable rate feature; the APR (corresponding to the periodic rate) and the minimum monthly payment can change as a result. An increase in the rate may cause more payments to be necessary. The APR includes only interest and no other costs and is based on the value of an index plus a margin. During the draw period and the repayment period, the index is the U.S. prime rate of interest as published on the last business day of each month in the Money Rates column of The Wall Street Journal. The margin will range from 0.75% to 3.25% and will be determined based on the available equity in your home, occupancy status, lien position and credit worthiness. Ask us for the current index value, APR, margin and discount. After you open a credit line, rate information will be provided on periodic statements we send you. 10

11 Rate Changes. The APR can change monthly. There is no limit on the amount by which the rate can change in any one-year period. The maximum ANNUAL PERCENTAGE RATE that can apply for an Equity My Way SM owner-occupied line of credit is 18% and non-owner occupied line of credit is 19%. The minimum ANNUAL PERCENTAGE RATE that can apply to an Equity My Way SM owner-occupied line of credit is 4.00%. The minimum rate for a non-owner occupied line of credit is 5.50%. Fixed-Rate Features. If you choose to convert any portion of your balance to a fixed rate using the fixed rate conversion option, you will incur a finance charge. Finance charges will begin to accrue the next business day following the request. The interest rate for such products is based on the Index (described above) plus a margin; however, lower rates may be offered from time to time. Exercise of the fixed-rate conversion option may increase or decrease your rate. Ask for our current interest rates before exercising the fixed-rate conversion option. If you have multiple fixed-rate conversions, the finance charge for each conversion may be different depending on when you request the conversion. Loan Servicing Fees. Reconveyance and demand fees will be charged at our current rate when the line of credit is paid in full and closed. Historical Example The following table shows how the APR and the minimum monthly payments for a single $10,000 credit advance would have changed based on changes in the indices over the past fifteen (15) years. The index values selected were effective July 1 of each year. While only one payment amount per year is shown, payments could have varied during each year. The table assumes no additional credit advances were taken, that only the minimum payments were made and that the rate remained constant through the year. It does not necessarily indicate how the index or your payments will change in the future. 11

12 Equity My Way SM Line of Credit Example: APR based on an owner-occupied line of credit Monthly ANNUAL Payment PERCENTAGE interest Year Index Margin* RATE only Draw Period: % 0.75% 9.250% $ % 0.75% 8.500% $ % 0.75% % $ % 0.75% 7.500% $ % 0.75% 5.500% $ % 0.75% 4.750% $ % 0.75% 4.750% $ % 0.75% 6.750% $ % 0.75% 9.000% $ % 0.75% 5.750% $ % 0.75% 4.000% $ % 0.75% 4.000% $ % 0.75% 4.000% $ % 0.75% 4.000% $33.30 * The margin in this table is an example and may not be the margin on your line of credit. Agreement to Be Contacted You agree that Golden 1 may contact you at the telephone number you have provided either during the application process or during the term of this loan. This contact agreement extends to any cellular (mobile) phone number you may also provide. You understand that Golden 1 will use this contact information if you have defaulted on your loan to discuss your account or exchange information concerning your default. You also understand that Golden 1 may employ the use of an automated dialer or pre-recorded message. 12

13 Glossary Annual membership or participation fee: An annual charge for access to a financial product such as a line credit, credit card, or account. The fee is charged regardless of whether or not the product is used. Annual Percentage Rate (APR): The cost of credit on a yearly basis. For closed-end credit, such as car loans or mortgages, the APR includes the interest rate, points, broker fees, and other credit charges that the borrower is required to pay. An APR, or an equivalent rate, is not used in leasing agreements. Application fee: Fees charged when you apply for a loan or other credit. These fees may include charges for property appraisal and a credit report. Balloon payment: A large extra payment that may be charged at the end of a mortgage loan or lease. Closing costs: Fees paid when you close (or settle) on a loan. These fees may include application fees; title examination, abstract of title, title insurance, and property survey fees, fees for preparing deeds, mortgages, or settlement documents; attorneys fees; recording fees; estimated costs of taxes and insurance; and notary, appraisal, and credit report fees. Under Real Estate Settlement Procedures Act, the borrower receives a good faith estimate of closing costs within 3 days of application. The good faith estimate lists each expected cost as an amount or a range. Credit Limit: The maximum amount that may be borrowed on a credit card or under a home equity line of credit plan. Equity: The difference between the fair market value of the home and the outstanding balance on your mortgage plus any outstanding home equity loans. Index: The economic indicator used to calculate interest-rate adjustments for adjustable-rate mortgages or other adjustable-rate loans. The index can increase or decrease at any time. 13

14 Interest rate: The percentage rate used to determine the cost of borrowing money, stated usually as a percentage of the principal loan amount and as an annual percentage rate. Interest-rate cap: A limit on the amount that your interest rate can increase. Two types of interestrate caps exist. Periodic adjustment caps limit the interest-rate increase from one adjustment period to the next. Lifetime caps limit the interestrate increase over the life of the loan. By law all adjustable-rate mortgages have an overall cap. Margin: The number of percentage points the lender adds to the index rate to calculate the ARM interest at each adjustment. Minimum payment: The lowest amount that you must pay (usually monthly) to keep your account in good standing. Under some plans, the minimum payment may cover interest only; under others, it many include both principal and interest. Points: A point is equal to 1 percent of the principal amount of your mortgage loan. For example, if a mortgage is $200,000, one points equals $2000. Lenders frequently charge points in both fixed-rate and adjustable-rate mortgages to cover loan origination costs or to provide additional compensation to the lender or broker. These points usually are paid at closing and may be paid by the borrower or the home seller or may be split between them. In some cases, the money needed to pay points can be borrowed (incorporated in the loan amount), but doing so will increase the loan amount and total costs. Discount points (also called discount fees) are points that you voluntarily choose to pay in return for a lower interest rate. Security interest: If stated in your credit agreement, a creditor s, lessor s, or assignee s legal right to your property (such as your home, stocks, or bonds) that secures payment of your obligation under that credit agreement. Transaction fee: A fee charged each time a withdrawal or specified transaction is made on a line of credit, such as a balance transfer fee or a cash advance fee. 14

15 Variable rate: An interest rate that changes periodically in relation to an index, such as prime rate. Payments may increase or decrease accordingly. Where to Go for Help For additional information or to file a complaint about a bank, savings and loan, credit union, or other financial institution, contact one of the following federal agencies, depending on the type of the institution. Regulatory Agency Regulated Entity(ies) Federal Reserve Consumer Help Federally insured P.O. Box 1200 state-chartered Minneapolis, MN bank members of (888) The Federal Reserve System Consumer Financial Protection Bureau Insured depository (CFPB) P.O. Box 4503 institutions and Iowa City, IA credit unions (and (855) their affiliates) with assets > than $10 billion, and nonde-_ pository institutions such as mortgage originators, mortgage brokers and servicers, larger participants of other financial services products, private education loan providers, and payday lenders. Office of the Comptroller of the Currency National banks and (COC) Customer Assistance Unit federally chartered 1301 McKinney Street, Suite 3450 savings banks/ Houston, TX associations (800)

16 Federal Deposit Insurance Corporation Federally insured (FDIC) Consumer Response Center state-chartered 1100 Walnut Street, Box 11 banks that are not Kansas City, MO members of the (877) ASK-FDIC or (877) Federal Reserve System Federal Housing Finance Agency Fannie Mac, (FHFA) Consumer Communications Freddie Mac Constitution Center and the Federal 400 7th Street S.W. Home Loan Banks Washington, D.C (202) National Credit Union Administration Federally chartered (NCUA) Consumer Assistance credit unions 1775 Duke Street Alexandria, VA (800) Federal Trade Commission (FTC) Finance companies, Consumer Response Center retail stores, auto 600 Pennsylvania Avenue, N.W. dealers, mortgage Washington, D.C companies and other (877) FTC-HELP or (877) lenders, and credit bureaus Securities and Exchange Brokerage firms, Commission (SEC) mutual fund Complaint Center companies, and 100 F. Street, N.E. investment advisers Washington, D.C (202)

17 Farm Credit Administration Office of Congressional & Public Affairs 1501 Farm Credit Drive McLean, VA (703) Agricultural lenders Small Business Association (SBA) Small business Consumer Affairs lenders 409 3rd Street, S.W. Washington, D.C (800)U-ASK-SBA or (800) Commodity Futures Trading Commodity brokers, Commission (CFTC) commodity trading st Street, N.W. advisers, commodity Washington, D.C pools, and introducing (866) brokers U. S. Department of Justice (DOJ) Fair lending and fair Criminal Division housing issues 950 Pennsylvania Avenue, N.W. Washington, D.C (202) Department of Housing and Fair ending and fair Urban Development (HUD) housing issues Office of Fair Housing/Equal Opportunity 451 7th Street, S.W. Washington, D.C (800) More Resources For more resources on mortgage and other financial topics, visit 17

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